Energize Telecoms

Benefits and risks for telcos considering opportunities in energy management

For several decades the prospect of energy utility and telco convergence has loomed, but with limited results. All of the above change factors, however, demonstrate a transformational shift in the energy sector and open new opportunities for telecom and technology operators. Global players have already been stepping up to the challenge.

As energy markets transform and technologies develop, the world of the traditional power utility israpidly changing:

Markets have liberalized, separating customers from networks and producers, and customer centricity is a growing trend.

Power generation is decentralizing and becoming less controllable as we switch to renewables to chase CO2 reduction targets, and users are becoming mini-producers while disruptive technologies such as home batteries combine with ever-cheaper solar photovoltaics; networks need to adapt to bidirectional flows and greater information needs for system stability.

Smart meter deployment of various types (some driven by regulation and on a massive scale) aims to reduce or shift the timing of energy consumption to act on energy-efficiency targets and assist the grid.

Advanced appliances are more capable of supporting grid balancing and load shifting, without relying on consumer in-flight response.

More data and customer information are becoming available, but need to be managed and exploited in the energy arena for dynamic segmentation, marketing, pricing, demand forecasting and load shifting.

Digital natives have arrived in the customer base, with higher expectations to control their homes remotely and interact with their utilities.

For several decades the prospect of energy utility and telco convergence has loomed, but with limited results. All of the above change factors, however, demonstrate a transformational shift in the energy sector and open new opportunities for telecom and technology operators. Global players have already been stepping up to the challenge. Google, Samsung, Apple, Microsoft and others have signaled their strong intent for grabbing a piece of the energy pie, with notable energy investments via acquisitions (e.g. Google and Nest, and Samsungâs SmartThings) or partnering (Trilliant, the Silicon Valley smart grid vendor, and RWE npower in the UK).

In 2015, the race has been heating up as success stories have multiplied. With Verizon unveiling an energy-as-a-service platform for utilities, SK Telecom introducing a global energy cluster in cooperation with the state utility, Orange Poland launching an electricity resale offer, AT&T licensing its Digital Life smart home management platform to Telefonica, and Romanian cable operator RCS & RDS entering into energy production, we see that telecom operators are proactively exploring the energy opportunity via a variety of business models.

Still, the question remains: which routes should telcos take today to make entry into the energy sector financially worthwhile?